In 2012, the Australian Customs and Border Protection Service (Customs and Border Protection) considered the results of an audit of a corporate customs brokerage, when it decided to cancel that company's licence. The Administrative Appeals Tribunal (AAT) recently set aside that decision and in substitution ordered a reprimand for the company. However, the case highlights the importance of audit results, as a part of Customs and Border Protection's compliance program.
Freight & Trade Alliance (FTA) Director Paul Zalai took the opportunity to talk with Mr Doug Greaves, Director Compliance Operations NSW in the Compliance Assurance Branch of Customs and Border Protection. Doug has national responsibility for their audit program.
1. Paul Zalai – What level of industry co-operation does Customs and Border Protection generally receive when auditing?
We conduct the great majority of audits in a cooperative way. If the audited party has any concerns or questions about the process, it is always welcome to discuss them with the auditors, or even with the Manager of the relevant audit team. This generally results in a consensus about the outcomes.
2. Paul Zalai – When in the audit process does Customs and Border Protection first reveal issues of concern?
We will raise concerns in the entrance interview, during the audit process. After we have studied relevant transactions, we prepare a draft audit report, which we provide to the audited party. This report will highlight any issue or matters of concern that we have identified. We then invite the audited party to provide written feedback on that draft report. If there is substantial disagreement about any matter, then further discussions will take place, to try to resolve it.
3. Paul Zalai – What happens if there is an unresolved disagreement between Customs & Border Protection and the company on technicalities?
Customs and Border Protection will ultimately make a call on the matter, having carefully considered all the arguments and supporting material presented by the audited entity. In other words, the final audit report will reflect the conclusions of the audit team,
4. Paul Zalai – What is the legal standing of an audit report?
The final audit report is not a legal judgment. It is simply a report that describes the findings and informed assessments made by the auditors, together with a set of recommendations. Such recommendations may include the submission of amended import declarations, or the payment of additional revenue. Under our legislation, there is no obligation on the audited party to implement those recommendations. However, the legislation gives Customs and Border Protection the power to apply other treatments, including sanctions, which the audit report would inform.
5. Paul Zalai – Can you be more specific about "other" treatment options?
It could include one or more things, including:
· issuing letters of demand for unpaid revenue
· commencing litigation to recover unpaid revenue
· imposing infringement notices
· initiating a formal investigation, which could lead to prosecution, or
· targeting the company's future imports for examination and verification, where we consider the risk deserves such intervention.
Therefore, the audit report should be taken seriously by the party being audited.
6. Paul Zalai – What rights does industry have to challenge these actions?
Depending on the nature of the action by Customs and Border Protection, the impacted party has various options available to them. That party may decide to pay any revenue demands "under protest" and then take their case to the AAT, or they may opt to contest those revenue demands in court. If charged with offences, the relevant parties can defend themselves in court. If that party believes their consignments are being subjected to unfair or unreasonable delays, then they can raise the matter with our Complaint and Compliments service. If they have concerns about a Customs and Border Protection decision, then they make a formal complaint to the Commonwealth Ombudsman's Office.
7. Paul Zalai – Thank you for your time. I am sure that this information will help industry in managing future audit activities.
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